Question

If the functional currency of the foreign operation is the same as the parent's functional currency,...

If the functional currency of the foreign operation is the same as the parent's functional currency, which of the following statements is correct?

Multiple Choice

  • a) The investment in the foreign operation is classified as a non-monetary asset.

  • b) The foreign operation is classified as a foreign affiliate.

  • c) The foreign operation's financial statements are translated using the functional currency translation (FCT) method.

  • d) The foreign operation's financial statements are translated using the presentation currency translation (PCT) method.

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Answer #1

(Q) If the functional currency of the foreign operation is the same as the parent's functional currency, which of the following statements is correct?

(Ans) Option :- (B) - The foreign operation is classified as a foreign affiliate.

  • A functional currency is the main currency that a company conducts its business. A foreign subsidiary is considered to be an integrated or affliated foreign operation the functional currency of the foreign operation should be same as the parent.
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